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Friday, 28 September 18
FITCH RATINGS: METALLURGICAL COAL MINERS MAY CURB COSTS AS PRICES SLIP
Strong cost inflation in the global metallurgical coal sector suggests that miners may focus on cost controls as prices decline from their current high levels over the next 18 months, say Fitch Ratings and CRU. However, mining companies rated by Fitch are well-positioned for any potential squeeze on margins, as their costs are relatively low by global standards and, in most cases, their diversified business operations limit exposure to the sector.
CRU estimates that global costs in the metallurgical coal sector increased by 18% in 2017 and continued to rise in 2018. Severe weather has played a role in Australia, causing supply-chain disruption that led to demurrage penalties and increased storage costs for unshipped coal. However, costs have also been pushed up globally by higher oil prices and attempts by mining companies to maximise production to take advantage of high prices.
Coking coal prices are currently sufficiently high that cost inflation has not undermined profitability. CRU estimates that the seaborne industry generated an average cash margin of 40% in 2016-2017, and profitability has remained very strong this year.
The metallurgical coal market is unlikely to become oversupplied in the near term, and Fitch does not expect prices to fall deep into the cost curve, as they did during 2014-2016. However, prices have already eased off from their peak of USD260/tonne in 4Q16, and are likely to decline further as supply constraints continue to ease. Fitch’s current assumptions are that hard coking coal prices will average USD185/tonne this year and USD140/tonne thereafter. These declines could put pressure on some less competitive mining companies to reduce costs to protect margins.
Among Fitch-rated companies, Teck Resources (BB+/Positive) has the largest exposure to the metallurgical coal sector, which accounted for 60% of its segment EBITDA in the 12 months to 30 June 2018. The company is among those that have increased use of contractors and rented more mining equipment to raise short-term output, which has pushed up marginal costs. Nevertheless, Teck is still in the lower half of the global cost curve (FOB port) and its costs remain lower in US dollar terms than in 2014. Teck has also taken advantage of strong margins and cash flow to reduce leverage. The main credit issue facing the company is the prospect of continued project spending and its funding resulting in weaker cash flows and higher financial leverage.
BHP Billiton (A/Stable) and Anglo American (BBB-/Stable) also have significant metallurgical coal assets, mostly located in Australia, where coal mines are generally relatively low cost by global standards. BHP and Anglo also have diversified operations, with metallurgical coal accounting for only around 16% of BHP Billiton’s revenue and 17% of Anglo’s in the financial year ending June 2017. There could be increased focus on improving efficiency in the Australian coal sector, as already signalled by some companies, but CRU and the Australian government expect production to continue to grow strongly over the next four years.
Meanwhile, mining service companies and earthmoving equipment manufacturers should continue to benefit from rising demand and a better pricing environment as miners continue with new projects and increase production. Emeco (B/Stable), which has the largest exposure to metallurgical coal among Fitch-rated companies, reported improved EBITDA margin as the commodity sector recovered. It also improved its leverage position. Further leverage improvements are likely in 2019-2021 due to equity-funded acquisitions and a tight rental equipment market in Australia.
Source: Fitch Ratings
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Monday, 19 November 18
SUPRAMAX: THE BSI CONTINUED TO FALL LAST WEEK, ESPECIALLY THE ASIAN ROUTES - BALTIC BRIEFING
Capesize
After a cut throat couple of weeks, the market finally appeared to have found a floor and rates ticked up. Those analysts that predict ...
Sunday, 18 November 18
COAL STOCKS IN A THIRD OF NTPC PLANTS CLOSE TO NIL - FINANCIAL EXPRESS
Coal supply shortage continues to haunt NTPC, the country’s largest power generator, with latest government data showing 31% of the company&r ...
Thursday, 15 November 18
OIL MARKET REPORT: HEEDING THE WARNINGS - IEA
In last month’s Report, we noted that since the middle of the year oil supply had increased sharply, with gains in the Middle East, Russia an ...
Wednesday, 14 November 18
BIMCO ADOPTS 2020 BUNKER CLAUSES
BIMCO has developed two 2020 bunker clauses that deal with general compliance and the transitional period for an early December release.
...
Wednesday, 14 November 18
SHIPPING MARKET INSIGHT - KONSTANTINOS KONTOMICHIS
The shipping industry is going through an interesting period across all markets. Since the end of last year, the Dry Baltic Index has been showing ...
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Showing 1561 to 1565 news of total 6871 |
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- Binh Thuan Hamico - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Indika Energy - Indonesia
- Altura Mining Limited, Indonesia
- Port Waratah Coal Services - Australia
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
- Indogreen Group - Indonesia
- Thiess Contractors Indonesia
- Carbofer General Trading SA - India
- SMC Global Power, Philippines
- Ministry of Finance - Indonesia
- Kumho Petrochemical, South Korea
- Africa Commodities Group - South Africa
- Attock Cement Pakistan Limited
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- GVK Power & Infra Limited - India
- VISA Power Limited - India
- Sojitz Corporation - Japan
- San Jose City I Power Corp, Philippines
- Lanco Infratech Ltd - India
- Meenaskhi Energy Private Limited - India
- Sree Jayajothi Cements Limited - India
- Videocon Industries ltd - India
- Vizag Seaport Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Latin American Coal - Colombia
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Indian Oil Corporation Limited
- Kepco SPC Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- TeaM Sual Corporation - Philippines
- Orica Mining Services - Indonesia
- Ministry of Mines - Canada
- Mercuria Energy - Indonesia
- Indonesian Coal Mining Association
- Bayan Resources Tbk. - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Marubeni Corporation - India
- ASAPP Information Group - India
- Kaltim Prima Coal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Global Business Power Corporation, Philippines
- CNBM International Corporation - China
- Jorong Barutama Greston.PT - Indonesia
- MS Steel International - UAE
- Commonwealth Bank - Australia
- Eastern Energy - Thailand
- Meralco Power Generation, Philippines
- Iligan Light & Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Parry Sugars Refinery, India
- London Commodity Brokers - England
- ICICI Bank Limited - India
- Kalimantan Lumbung Energi - Indonesia
- The University of Queensland
- Grasim Industreis Ltd - India
- Globalindo Alam Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- European Bulk Services B.V. - Netherlands
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
- Gujarat Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Tamil Nadu electricity Board
- McConnell Dowell - Australia
- Malabar Cements Ltd - India
- Bhatia International Limited - India
- Sindya Power Generating Company Private Ltd
- Kartika Selabumi Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- Energy Development Corp, Philippines
- Standard Chartered Bank - UAE
- SMG Consultants - Indonesia
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- Australian Coal Association
- Wood Mackenzie - Singapore
- Baramulti Group, Indonesia
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- White Energy Company Limited
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- IEA Clean Coal Centre - UK
- Metalloyd Limited - United Kingdom
- Riau Bara Harum - Indonesia
- Power Finance Corporation Ltd., India
- Bahari Cakrawala Sebuku - Indonesia
- Sical Logistics Limited - India
- Georgia Ports Authority, United States
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- The Treasury - Australian Government
- Larsen & Toubro Limited - India
- Bulk Trading Sa - Switzerland
- Oldendorff Carriers - Singapore
- Wilmar Investment Holdings
- Essar Steel Hazira Ltd - India
- Global Coal Blending Company Limited - Australia
- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
- Intertek Mineral Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- New Zealand Coal & Carbon
- Bukit Asam (Persero) Tbk - Indonesia
- Parliament of New Zealand
- Indian Energy Exchange, India
- Central Electricity Authority - India
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement PLC, Thailand
- PTC India Limited - India
- International Coal Ventures Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Mjunction Services Limited - India
- Aboitiz Power Corporation - Philippines
- Star Paper Mills Limited - India
- Alfred C Toepfer International GmbH - Germany
- Barasentosa Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Miang Besar Coal Terminal - Indonesia
- Bharathi Cement Corporation - India
- Timah Investasi Mineral - Indoneisa
- Bhushan Steel Limited - India
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- GMR Energy Limited - India
- Goldman Sachs - Singapore
- Deloitte Consulting - India
- Electricity Generating Authority of Thailand
- Petron Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Madhucon Powers Ltd - India
- Economic Council, Georgia
- Tata Chemicals Ltd - India
- PowerSource Philippines DevCo
- Karbindo Abesyapradhi - Indoneisa
- Medco Energi Mining Internasional
- Rashtriya Ispat Nigam Limited - India
- Karaikal Port Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Romanian Commodities Exchange
- Pendopo Energi Batubara - Indonesia
- Coastal Gujarat Power Limited - India
- Directorate Of Revenue Intelligence - India
- Heidelberg Cement - Germany
- Coal and Oil Company - UAE
- Mintek Dendrill Indonesia
- Therma Luzon, Inc, Philippines
- Planning Commission, India
- Semirara Mining Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- Salva Resources Pvt Ltd - India
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- Asmin Koalindo Tuhup - Indonesia
- Aditya Birla Group - India
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- Bukit Makmur.PT - Indonesia
- Xindia Steels Limited - India
- Cement Manufacturers Association - India
- Siam City Cement - Thailand
- Central Java Power - Indonesia
- Bukit Baiduri Energy - Indonesia
- Chamber of Mines of South Africa
- Eastern Coal Council - USA
- Sakthi Sugars Limited - India
- Maheswari Brothers Coal Limited - India
- Edison Trading Spa - Italy
- Ministry of Transport, Egypt
- Renaissance Capital - South Africa
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- Rio Tinto Coal - Australia
- Trasteel International SA, Italy
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- Vedanta Resources Plc - India
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- India Bulls Power Limited - India
- CIMB Investment Bank - Malaysia
- Leighton Contractors Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Agrawal Coal Company - India
- South Luzon Thermal Energy Corporation
- Australian Commodity Traders Exchange
- Krishnapatnam Port Company Ltd. - India
- Bhoruka Overseas - Indonesia
- Global Green Power PLC Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Makarim & Taira - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- Kideco Jaya Agung - Indonesia
- Independent Power Producers Association of India
- OPG Power Generation Pvt Ltd - India
- Gujarat Sidhee Cement - India
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